Homeownership

Asset Building News Week, Groundhog Day Edition

February 3, 2012
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The Asset Building News Week is a weekly Friday feature on the The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include CFED's release of its Assets & Opportunity Scorecard, financial education, jobs, asset limits, lower-income consumers, the mortgage mess, and rhetoric about poverty, inequality, and mobility.

Lowering Mortgages Payments Inflated Due to Medical Bills

February 1, 2012
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Below is guest post written by a friend of the Asset Building Program, Mark Rukavina. Mark runs The Access Project and is one of the country's leding experts on medical debt and its debilitating impacts. 

If you think it is implausible that co-payments for doctor or hospital visits could increase your mortgage interest rate, think again.  Medical bills, even those that have been paid in full, can and do ruin credit and increase the cost of loans.   

The reasons for this vary.   Healthcare costs, for some, are simply unaffordable and bills go unpaid.  Others are confused by their bills and allow them to go past the due date or be sent to a collection agency.  Studies have found that American patients often do not understand claims well enough to know why they owe the bill or if it is correct.  An American Medical Association study found that one of every five claims is inaccurately processed by health insurers. 

In 2010, thirty million Americans were contacted by collection agencies for unpaid medical bills.  Research published in the Federal Reserve Bulletin found that more than half of all collection accounts on credit reports are medical in nature. 

Total healthcare spending in America amounted to $2.6 trillion in 2010.  Of this total, $300 billion was paid out of pocket, for example through deductibles and co-payment fees.   Between 2009 and 2010, the growth in out-of-pocket spending accelerated as more people switched to higher deductible plans or increased co-payments in exchange for lower premium costs.  

As out-of-pocket healthcare costs increase, people are left wondering whether they or their insurer is supposed to pay the bill.   Understandably, providers want payment in exchange for their services.  When they do not receive prompt payments, they initiate action similar to other businesses and send the bills to collection.

It is a common misconception that medical debt cannot hurt your credit score.  Collection agencies typically report medical bills to the credit bureaus and view all collection accounts as delinquent.  They do so without regard for why the bills were sent to collection. With medical collections, many people pay off the balance promptly upon hearing from a collection agency.  They are frequently surprised to find that these accounts stay on their credit report and lower their score.

CFED Scorecard Release Highlights Widespread Asset Poverty

January 31, 2012
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CFED released their 2012 Assets & Opportunity Scorecard today and held a webinar to introduce new data on asset poverty, financial security, and sound policy approaches. This is the 10-year anniversary of the Scorecard, which grades all 50 states and the District of Columbia in five key areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education.

CFED Webinar: Assets & Opportunity Scorecard Release

January 30, 2012
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Our asset building friends at CFED are hosting a webinar tomorrow at noon Eastern Time to release a major report, the Assets & Opportunity Scorecard. This key document presents national and state level data about families' asset levels and financial stability. Registration is available here.

Asset Building News Week, 4th Edition

January 27, 2012
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The Asset Building News Week is a weekly Friday feature on the The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include alternatives to mainstream banking, EITC awareness, financial literacy, income and wealth inequality, homeownership, bankruptcy, and weakened social protection.

What Obama Missed?

January 26, 2012
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President Obama used his State of the Union address to argue that rising levels of inequality are undercutting the promise of America. He said “we can either settle for a country where a shrinking number of people do really well while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same set of rules.” The concrete proposal was modest tax reform. It’s not fair that Warren Buffet and Mitt Romney have tax rates half the size of the people that work for them. True enough. CEO pay has skyrocketed as average wages have fallen. But there’s actually much more at stake and a need for a larger policy response.

The growing concentration of wealth is bad for our democracy. It tips the playing field and leads to monopoly power cuts off competition and short-circuits innovation. It also means there are fewer resources available for everybody else to deploy, which makes it harder for striving families to move up the economic ladder. Upward mobility in America is too limited, and is lower than it is in other developed countries. It is particularly difficult for those born into families living in poverty. A poor child has a less than one-in-five chance of ending up in the top 40% of earners (roughly $50,000). Obama missed a chance to articulate a policy agenda focused on helping people move up and out of poverty. Access to a good education and good jobs is a start, but it isn’t enough. To make the upward climb, we know that families must be able to save and build up some pools of assets. This is because savings can help families cope with unexpected hardship, such as a job loss or illness, or be strategically deployed to pay for educational or training opportunities. Savings are a foundation for economic mobility and the President should have identified a set of policies that would help families save for their future.

Asset Building News Week, 3rd Edition

January 20, 2012
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The Asset Building News Week is a weekly Friday feature on the The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include taxes, the housing crisis, prepaid cards, public benefits reform, prize linked savings, economic mobility and inequality, and education.

William Elliott: Does Structural Inequality Begin with a Bank Account?

January 12, 2012
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As we announced last week, the Asset Building Program and the Center for Social Development at Washington University in St. Louis are co-releasing a series of reports, Creating a Financial Stake in College, by William Elliott III on the importance of children's savings and college outcomes. The second report in the series is being released today and is available for download here. The press release from last week is also available here.

New Feature: Asset Building News Week

January 6, 2012
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Way back in 2011, we conducted a survey of readers that told us a number of things: importantly, we learned that many of you look to us for timely news from the asset building field and that a regular round-up of articles would be a welcome addition to our other content. In keeping with the spirit of 2012 and resolutions and all that good stuff, the Asset Building Program is introducing a new weekly blog feature: a Friday news round-up. We hope this will help you (and us, for that matter) keep up with developments in the field, note-worthy news, and learn about partner organizations working around the U.S. on asset building, economic security, anti-poverty policy, and accessible financial services for low- and middle-income Americans. Topics will vary week-to-week (and depending on the news!) but we’ll aim to provide a diverse overview of the things we’re keeping an eye on that we think you’ll find interesting too.

Fannie and Freddie did not Cause the Financial Crisis

January 3, 2012
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I missed this on my way out of town, but I wanted to steer people to this article by Joe Nocera of the New York Times.

He writes about the workings of an ideologically-driven campaign to lay the entire financial crisis at the feet of Fannie Mae and Freddie Mac, the government-sponsored entities charged with boosting mortgage lending. Yes, mistakes and miscalculations were made by these GSEs and we certainly should be asking what we can do differently, but in my opinion Nocera’s diagnosis is spot on. The subprime mortgage market had already exploded before Fannie and Freddie began purchasing these loans in earnest. In fact, they were actually late to the game. Once on the field, they began buying up these loans not to promote low- and moderate –income homeownership but to chase market share. They exacerbated the problem but hardly caused it. They should have stayed on the sidelines.

It was the drive for market share—and not the requirement to meet affordable housing mandates—that moved Fannie and Freddie into the already exploding subprime market. Nocera paints the picture of a textbook operation to muddy the waters of understanding, with staring roles played by the Wall Street Journal editorial page and the American Enterprise Institute. He calls it “The Big Lie” and it depends on an echo chamber to advance the thesis that government rather than actors in the financial sector are to blame for the advent of the financial crisis and its aftermath.

What to do about Fannie and Freddie remains an open question. The Obama administration has sketched out a set of potential options but (for some reason) doesn’t believe they can advance a reasonable, bipartisan discussion on the Hill. That’s too bad because there are important issues to address, such as how to help aspiring families become responsible homeowners in the future get out from under the debilitating debt of mortgages that exceed the value of thier homes. I wholeheartedly agree with Nocera’s conclusion:

Three years after the financial crisis, the country would be well served by a real debate about the role of government in housing. Should the government be helping low- and moderate-income Americans own their own homes? If so, is there an acceptable level of risk? If not, how do we recast the American dream?

To have that debate, though, we need a clear understanding of what role the government’s affordable-housing goals did — and did not — play in the crisis. And that is impossible as long as the Big Lie holds sway.

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